(Image via Desert Mountain Energy Corp.)
When Stockhouse most recently covered
Desert Mountain Energy Corp. (TSX-V: DME, OTCQX: DMEHF, Forum) earlier this month, we looked at this Company’s work to extract and process one of the top resource investments around – helium. The second most abundant and second lightest element in the known universe.
One of the last, and possibly most significant sources of helium is Northeastern Arizona’s Holbrook Basin. In our previous editorial on DME, we highlighted a recent report on the subject
titled “Feasibility of New Helium Well Development in the Holbrook Basin, Arizona” published in May 2021 by Colorado School of Mines Graduate Geologist Jacob Smith, which assessed the economic feasibility of development of helium resources in the Holbrook Basin and the potential for further exploration in the area.
Located in Northeastern Arizona, the Holbrook Basin spans approximately 273 km by 128 km and has among the highest helium grades in the world. Desert Mountain’s Holbrook project contains more than 343 sq. km (85,000 acres) of key helium prospects under lease.
As explained in previous editorial on the Company, Desert Mountain operates near the Pinta Dome area of the Holbrook Basin, where historic production was mainly focused, as well as Navajo Springs, and East Navajo Springs fields. Desert Mountain Energy recently completed two new wells in the Holbrook Basin and plans to put these new wells into production in late 2021.
With structural mapping occurring along with stratigraphic knowledge gained from previous drilling in the area, the best places for exploration and new wells can be discovered with even greater clarity.
These represent two of the world’s richest historic producing helium gas fields, the Pinta Dome and Navajo Springs. Historic production of 9.23 billion Cubic Feet (Bcf) with exceptionally high grades of helium gas produced, ranging from 8%-10%, versus the industry benchmark of 0.3% to 1% for commercial grade.
Casually referred to by many as “The Saudi Arabia of Helium”, the Holbrook Basin is widely considered to be the world’s best source for Helium. The market demand for this gas is high, given that its physical and chemical properties make it essential in a number of medical, scientific, and industrial applications, from MRI machines to air bags and of course, balloons.
Why is the demand so high? Helium is a non-renewable resource and cannot be replaced by other elements in many of its uses. As Smith’s report noted, helium’s demand has been sharply increasing in value in recent years. There is a finite amount of this gas available, and the price increase is reflected in the results of the Bureau of Land Management (BLM) auctions of helium from the Federal Helium Reserve from 2015 to 2019 (see image below).
(Sales of helium from the Federal Helium Reserve at BLM auctions, 2015-2019. Image via Feasibility of New Helium Well Development in the Holbrook Basin, Arizona.)
The report also pointed out that since these auctions have now ceased, more of the market has opened to private suppliers of helium. It added that helium is generally cheaper to process when natural gas is not present. This makes the reservoirs in the Holbrook Basin particularly interesting for exploration, as the carrying gas consists primarily of nitrogen with little to no CO
2 and natural gas, depending on the well.
The 2018 US Government Crude Helium Auction saw crude helium auction prices increase from $119.31 to $279.95. This represents a 135% increase year-to-year in the world helium market and is due to dwindling reserves. The 2019 US crude helium auction anticipated to be the last one due to the dwindling reserves mandated by legislation. Helium is being considered as a primary target for exploration, as helium prices have surged while natural gas prices have dropped.
Desert Mountain continues to work in a prime location to capitalize on helium’s rising value. DME will soon complete construction of its helium-separation plant in Navajo County, approximately within one mile of the closest well and is projected to save the Company more than $7.5 million compared with other processing options. Specialized refining techniques and its nearby location will reduce transport costs and increase the value of the produced helium, as Smith’s report stated, by providing industry with a more highly concentrated product.
Further efforts were made to advance this work when the Company filed documents with the
United States Federal Contractor Registration. This registration is a requirement for doing business with the US Government as a supplier.
This inert, non-toxic, colourless, and odourless gas has a low boiling point (-268.9°C) and freezing point (-272.2°C) - the lowest of any element on the periodic table.
Helium’s physical and chemical properties make it the only option for cryogenic applications that require extremely low temperatures.
From the report –
“Even where substitutions are possible, helium is often the optimal choice where technological advances take advantage of its unique combination of attributes. The medical field, for example, is finding a rapidly expanding array of new applications for helium based on its physical and chemical properties, and space exploration continues to rely on helium.”
With the continued research and advances in technology, the need for helium’s unique physical and chemical properties is projected to steadily grow. This is proving to be an excellent time for this opportunity, given the rise in demand and price points for helium, combined with the end of BLM’s auctions of federal helium reserves, which opened more of the market to private suppliers.
Mainly found in the United States, specifically Nevada’s natural gas wells, helium is on the rise, both literally and in a financial sense. Desert Mountain Energy Corp. looks to be an operation that is in the right place at the right time to capitalize on one of the best resource investment opportunities in a generation. Demand for helium is projected to increase further as supplies continue to decrease.
For a deeper look into this Company’s operations, visit
desertmountainenergy.com.
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.